Wednesday, August 20, 2014

Gripe sites protected despite use of URL and "Official" language

The board is a condo association usingthe name Sapphire Bay Condominiums West.Simpson bought a condo at Sapphire Bay in
2003, and, following a dispute with the Board, created a number of gripe sites
criticizing the Board, its members, and its lawyers.In 2004, the Board sued for violations of the
Lanham Act and analogous state claims, seeking an injunction and damages.Nope.The websites were noncommercial, the mark wasn’t famous, and the
websites weren’t likely to confuse.

Some notable facts: Simpson registered “sapphirebaycondos.com”
under his own name and operated a website purporting to be “The Official
Website of Sapphire Bay Condominiums West – St Thomas, VI.” However, directly beneath the site’s slogan was
“‘I don’t give a damn’ management,” and the home page linked to subpages with
language such as “Lawyer Lies and Five Board Members Commit a Crime.”After the Board’s C&D, Simpson rebranded
the website as “The Owners Official Website For the Elimination of Dishonesty
on the Board of Directors of Sapphire Bay Condominiums West, St Thomas, VI.”

Simpson also denied affiliation with the entity to which he transferred
the domain name, but the court found that he operated and directed it.Simpson also registered a bunch of trade
names similar to the Board’s: “Sapphire Bay West,” “Sapphire Bay West Condos,”
“Sapphire Bay Condos West,” “Sapphire Bay Condominiums West,” “Sapphire Beach
Condominiums West,” and “Sapphire Beach West” with the Corporations and
Trademark Division of the V.I., registrations that were revoked because they
were already registered or were similar to trade names already registered to
Bay Resorts, Inc.

In 2004, the district court preliminarily enjoined Simpson
from using sapphirebaycondos.com, or any derivative thereof, as a domain name
for any website under his ownership or substantial control. It also ordered him
to cancel the domain name sapphirebaycondos.com (which seems like a mistake for
a preliminary injunction, since it may be irreversable), and to stop
representing himself using the names above.The preliminary injunction was affirmed on appeal without opinion.(Among other things, the district court found
the Board’s mark to be “famous,” and found the websites to be commercial speech
because Simpson intended to harm the Board financially.Whatever we think of trademark law’s
expansiveness today—and I have a lot of thoughts—we may ultimately look at the
early 2000s as peak indifference to free speech in trademark law.)

He complied, but erected virtually the same website under
the domain name “usvicondos.com,” which has been operating continuously ever
since.Simpson, not giving up, admitted
he contributed content to the website, but claimed that a man named “Randolph
Lindsay” operated and controlled the website. The court found that, in fact, Simpson and
Lindsay were one and the same, though it didn’t matter to the outcome. (It's notable how little Simpson's denials mattered here, because liability simply wasn't supported by the other facts. Some courts might've stretched the Lanham Act out of distaste for a defendant who wouldn't admit he was responsible for the websites.)

The Board sought a permanent injunction and damages based
both on sapphirebaycondos.com and usvicondos.com.The Board didn’t clarify whether it was
seeking Lanham Act liability under §43(a)(1)(A) or (B), so the court analyzed
both. A threshold issue was whether the websites were commercial, “because the
Lanham Act only regulates commercial speech.”(Note the burbling circuit conflict here.)Making that determination requires
considering (1) whether the speech is an advertisement; (2) whether the speech
refers to a specific product or service; and (3) whether the speaker has an
economic motivation for the speech.

The Board didn’t allege that Simpson sold goods or services,
but claimed that his websites were commercial because they caused economic
injury.That didn’t make them commercial
speech.The websites didn’t advertise
goods or services; they didn’t refer to a specific product or service provided
by Simpson, but instead alleged, among other things, corruption by Board
members.There was no showing that
Simpson’s speech was economically motivated.The purpose was of course to attack the Board, but there was no evidence
of motive to benefit Simpson, or a competitor of the Board’s, economically.The district court concluded that the speech
was commercial for purposes of a preliminary injunction, but that wasn’t on a
full, formal record.

Also, as the court sort of adverted to in a footnote, the
law of gripe sites has changed a lot in ten years.(Ten years!)The preliminary injunction relied in part on Jews For Jesus v. Brodsky, 993
F.Supp. 282 (D.N.J. 1998), aff’d, 159 F.3d 1351 (3d Cir. 1998), in which the
court found commercial use where the defendant used the domain name jewsforjesus.com
to host a website critical of the Jews for Jesus religious organization.“However, key to the court’s reasoning was
that the website contained a hyperlink diverting visitors to an organization
offering competing goods and services.”(Note of course that the organization was not a “commercial” one in the
ordinary sense.)Simpson’s site
contained links, but not links that “divert[ed]” visitors to “any website
connected with goods or services.”Likewise, Planned Parenthood Federation of America, Inc. v. Bucci, No.
97–0629, 1997 WL 133313 (S.D.N.Y. Mar. 24, 1997), aff’d, 152 F.3d 920 (2d Cir. 1998),
found plannedparenthood.com infringing for a site that promoted (but did not
sell) an antiabortion book, served a commercial purpose “similar to a
publisher’s publicity kit.” That didn’t
describe Simpson’s sites.

Once you discount the appeal in this case and Jews for Jesus, “[t]he Third Circuit has
not decided whether the use of another’s trademark in connection with a
noncommercial gripe site violates the Lanham Act.”But several other circuits have protected
such sites in similar circumstances (all since 2004).Because Simpson’s websites were
noncommercial, the Lanham Act claims failed.

However, even if the sites counted as commercial, the Board
would still lose under the multifactor confusion test. The court went through
each version of the websites—the “Official”sapphirebaycondos.com site; the same URL using the slogan
“The Owners Official Website For the Elimination of Dishonesty …”; and the usvicondos.com
site.Most of the factors could be
applied to all three.

The Board had a descriptive mark and submitted no evidence
on market recognition, money spent on advertising, or anything else other than
use for over forty years: a weak mark.Condo purchases require sophistication and attention.There was no evidence of actual confusion
over ten years, only that the websites made some potential purchasers reluctant
to buy and that some renters asked about the sites.

Potentially interesting bit about marketing and advertising
channels: the court appealed to the paucity of search results to find that this factor favored
Simpson even though Simpson’s site was the top Google result:

While the Board argues a Google
search of the trade name “Sapphire Bay Condominiums West” first returns
Simpson’s Website Three, the Board failed to mention only thirty-three results
are generated from searching this term. Of those thirty-three results, over
half are related either to this litigation or websites operated by Simpson. The
Board does not allege (and did not prove) it has a website or any commercial
advertisements on the Internet. Many, if not all, of the remaining Google search
results direct users to third-party generated content providing information
about Sapphire Bay Condominiums West.

[Obligatory note about Google personalization here.For me, I got about 23,100 results for the
search, with quotes, and Simpson’s site was indeed the top result, followed by
two sites discussing earlier rounds in this case, followed by a review of the actual condos.]

Because Simpson didn’t sell anything, the “extent to which
the targets of the parties’ sales efforts are the same” factor was “inapplicable.”As for the relationship of the parties’
goods/services, the court noted that the Board was involved in real estate and
maintenance services.Simpson criticized
the Board. There was no evidence that consumers would likely think that any of
the websites, “whether characterized as ‘Official’ or not,” provide condominium
rental, real estate, or maintenance services, so this factor also weighed
against confusion. The plausibility of
the plaintiff entering the defendant’s market was “inapplicable,” since there
was no reason the consuming public might expect the Board to offer a service
critical of itself or that it would be likely to do so.

Now we get to the similarity of the marks and defendant’s
intent, which the court analyzed separately for each website.For the “Official Website” version,
similarity weighed in favor of likely confusion.The “Elimination of Dishonesty” version of sapphirebaycondos.com
was “vastly dissimilar” to the Board’s mark.The slogan contained the Board’s trade name, but “the phrase read in its
entirety denotes an entity or organization diametrically opposed to the Board,”
and similarity weighed against likely confusion.Even more so for the usvicondos.com version,
which didn’t use a similar URL and did use the “Elimination of Dishonesty”
slogan.

Intent: “there is no question [Simpson] erected the websites
with the intent to attack the Board.”Plus, the “Official Website” version with the initial domain name showed
an intent “to use the Board’s mark as if it were his own,” which favored a
finding of likely confusion as to that first version.For the second version, he “still used an
intentionally confusing domain name to draw what would presumably be the
Board’s customers.”But the changed
slogan made clear that the second version wasn’t officially sanctioned.In its full context, intent didn’t weigh for
or against anyone as to this version.(Not even a mention of initial interest confusion!More evidence for Eric Goldman that IIC is
dead.)And for the usvicondos.com
version, intent weighed against finding likely confusion.

Weighing all the factors, none of the sites were likely to
cause confusion. “No consumer could
reasonably believe the Board is promoting rental or real estate services
through self-effacing websites.”And
this was true even with the “Official Website” version, which described the
Board as providing “‘I don’t give a damn’ management” and featured a prominent picture
of what presumably was the Board’s flooded parking lot.Version one contained text links such as “SBCW
Board Members ... Could Go to Jail for Obstruction of Justice ...” “No
reasonable consumer would believe the Board operated a website for the purpose
of promoting its own malfeasance and criminal conduct.”

Now, to false advertising: The Board didn’t specifically
identify what allegedly false statements Simpson made, but the first website
version did contain the literally false statement “The Official Website of
Sapphire Bay Condominiums West – St Thomas, VI.” Still, analyzing the website in its full
context, “it contained many statements and photographs which are ambiguous or
possibly literally true.”This included
the photo of the flooded parking lot, as well as a photo of garbage “piled on
what appears to be the Board’s premises.”Construing the website as an ad, these were ambiguous or literally
true.(That doesn’t make the “Official”
statement anything other than literally false—however, that would qualify as
unbelievable in context and therefore puffery/immaterial.)The subsequent versions had nothing that was
literally false, only the ambigous statement “The Owners Official Website For
the Elimination of Dishonesty on the Board of Directors of Sapphire Bay
Condominiums West, St Thomas, VI.” It
wasn’t clear whether this was the official website of all condo owners, or the
official website of particular owners who want to eliminate dishonesty.If you add in punctuation (“Owner’s”), then
it’s literally true: it’s Simpson’s official website for eliminating
dishonesty.Since the Board didn’t
provide evidence of actual deceptiveness, the claim failed.

The Board didn’t specifically allege a federal dilution
claim in its amended complaint, but because the preliminary injunction was
based in part on that claim, the court here addressed it.(We owe thanks to this judge for fixing a
terrible-all-the-way-through opinion in the politest possible fashion, and
thoroughly to boot.)Of course,
noncommercial uses are specifically excluded under §43(c)(3)(C). Even if Simpson’s use had been commercial, the
Board would still lose because the mark isn’t famous.

Coordinate state-law claims, and tortious interference
claims, failed for similar reasons. (I’m
omitting, among other things, the discussion of the Virgin Islands’ general
adherence to the Restatement of Unfair Competition, though the court
specifically notes that “misappropriation” can’t be used to get around the
requirement of likely confusion when it comes to trademarks.)

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